QWEST CORP

Results of Operations

The following table summarizes the results of our consolidated operations for the three months ended March 31, 2025 and 2024:

For a discussion of certain trends that impact our business, see the MD&A discussion of trends impacting Lumen's business included in Lumen's reports filed with the SEC, including most recently its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025.

Operating Revenue

The following tables summarize our consolidated operating revenue recorded under our revenue categories described in Note 3—Revenue Recognition:

Total operating revenue decreased by $170 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Within each product category, these decreases were primarily due to the following factors:

•Decreases in Other Broadband of $47 million primarily due to fewer Mass Market customers for our lower speed copper-based broadband services;

•Decreases in Voice and Other of $13 million due almost entirely to the continued loss of copper-based Mass Market voice customers;

•Decreases in Fiber Broadband of $13 million driven by fewer Mass Market subscribers for our fiber services, primarily as a result of customers migrating to the Quantum Fiber services offered by Lumen (which bills customers for such services and pays us for use of our network in providing such services, as further described below);

•Decreases in Harvest of $28 million primarily attributable to declines in legacy voice services for Business customers of $16 million and a decrease in private line services of $4 million;

•Decreases in Nurture of $5 million primarily due to declines in Ethernet services;

•Grow was flat period over period; and

•Decreases in Affiliate services of $64 million primarily due to a $96 million decrease in direct legacy telecommunication services provided to our affiliates and an $8 million decrease in employee shared services expense allocated to our affiliates, partially offset by a $40 million increase in fiber broadband and ethernet services provided to our affiliates.

Operating Expenses

The following table summarizes our consolidated operating expenses:

Cost of Services and Products(exclusive of depreciation and amortization)

Cost of services and products (exclusive of depreciation and amortization) decreased by $16 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The decrease was primarily due to lower employee-related expenses of $20 million.

Selling, General and Administrative

Selling, general and administrative expenses decreased by $24 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 due principally to (i) a decrease of $11 million in bad debt expense, (ii) a decrease of $6 million in employee related expenses due to lower headcount, and (iii) a decrease of $3 million in external commissions.

Operating Expenses - Affiliates

Operating expenses - affiliates decreased by $27 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The decrease was primarily due to (i) a decrease of $17 million of network services purchased from affiliates, (ii) $6 million of lower allocated employee and professional services provided to us by our affiliates and (iii) a decrease of $4 million in direct telecommunication services charged to us by our affiliates.

Depreciation and Amortization

The following table provides details of our depreciation and amortization expense:

Depreciation expense increased by $9 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 due to net growth in depreciable assets.

Amortization expense decreased by $5 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 due to a net decrease in amortizable assets.

Other Consolidated Results

The following table summarizes our total other expense, net and income tax expense:

nm Percentages greater than 200% and comparisons between positive and negative values or to/from zero values are considered not meaningful.

Interest Expense

Interest expense increased by $3 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 primarily due to lower capitalized interest of $9 million, which was partially offset by the decrease in our average interest from 6.79% to 6.73%.

Interest Income - Affiliate, Net

Interest income - affiliate, net increased by $11 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. The increase in interest income - affiliate, net was primarily due to a higher average receivable from affiliates.

Income Tax Expense

For the three months ended March 31, 2025, our effective tax rate was 25.8%. For the three months ended March 31, 2024, our effective tax rates was 26.3%.